Question 1

Which of the following statements about federal tax return filing dates is false?

Accepted Answer

The answer of Which of the following statements about federal...

Question 2

Which of the following statements about taxpayer responsibility is false?

Accepted Answer

All of the statements about taxpayer responsibility are true. Taxpayers have a legal obligation to fulfill their tax responsibilities to the best of their ability. This includes paying the correct amount of taxes, filing accurate tax returns, and keeping appropriate records to support the reported income and deductions.

Question 3

Mr. and Mrs. Chung filed their unextended 2014 Form 1040 on May 30, 2015, and had no reasonable cause for the delinquency. The return showed a $10,479 balance of tax due. Compute the Chungs' late-filing and late-payment penalty.

Accepted Answer

The answer of Mr. and Mrs. Chung filed their unextended...

Question 4

If a taxpayer has insufficient financial means to pay a deficiency, the IRS may make an offer in compromise to settle for a lesser amount.

Accepted Answer

This statement is true. The IRS may make an offer in compromise if the taxpayer is unable to pay the full amount of their tax liability. An offer in compromise allows the taxpayer to settle for a lesser amount that is reasonable based on their financial situation.

Question 5

The geographic location of the trial court in a tax dispute determines which of the appellate courts will hear an appeal.

Accepted Answer

This is true. The trial court's geographic location determines which appellate court will hear the appeal in a tax dispute. This is because each appellate court has jurisdiction over specific geographic areas.

Question 6

Mrs. Hepp completed her 2014 Form 1040 on April 13, 2015. The return showed a $923 balance due. Mrs. Hepp needed more time to double check all her computations. What can Mrs. Hepp do to give herself more time?

Accepted Answer

Mrs. Hepp can file a request for an automatic extension of time to file her Form 1040 by April 15 and pay the estimated balance due with the extension request to avoid penalties.

Question 7

A taxpayer who wants a jury trial must pay the tax deficiency and then sue the government for a refund in U.S. District Court.

Accepted Answer

This is known as the "pay-to-play" rule and it applies to taxpayers who want to contest their tax liability in court. They must first pay the tax deficiency assessed by the IRS and then file a refund claim with the government. If the government denies the claim or fails to respond within six months, the taxpayer can then file a lawsuit in U.S. District Court and request a jury trial.

Question 8

Taxpayers who win their case in court are automatically entitled to recover litigation expenses from the government.

Accepted Answer

Taxpayers who win their case in court are not automatically entitled to recover litigation expenses from the government. The recovery of such expenses is subject to specific legal criteria and court discretion.

Question 9

Tony Curtis filed her 2014 income tax return on May 2, 2015. Which of the following statements is false?

Accepted Answer

All of the statements are true. Tony would not incur a penalty for filing on May 2 with a refund due, as long as she filed within three years of the original due date. Requesting an extension and paying estimated taxes by April 15 would also prevent any late-filing penalty. And in some cases, the IRS may waive penalties for late filing due to extenuating circumstances such as a family member's death.

Question 10

Ms. Dela filed her unextended 2014 Form 1040 on November 2, 2015, and had no reasonable cause for the delinquency. The return showed a $22,840 balance of tax due. Compute Ms. Dela's late-filing and late-payment penalty.

Accepted Answer

The answer of Ms. Dela filed her unextended 2014 Form...

Question 11

A taxpayer who is disputing a deficiency of $50,000 or less may request an informal hearing by the Small Tax Case Division of the Tax Court.

Accepted Answer

This statement is true. The Small Tax Case Division of the Tax Court handles disputes involving deficiencies of $50,000 or less and allows taxpayers to request an informal hearing.

Question 12

A professional tax return preparer must attach his or her signature and identifying number to each return prepared.

Accepted Answer

This is required by the Internal Revenue Service (IRS) for all tax return preparers who are paid for their services. The signature and identifying number help to ensure the accuracy and accountability of the return preparation process.

Question 13

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule if that person enjoyed significant financial benefit from taxable income omitted from the return.

Accepted Answer

The innocent spouse rule is designed to relieve an individual of liability for tax deficiencies that occurred due to the actions of their spouse or ex-spouse. However, this relief is only granted if the individual can prove that they did not know and had no reason to know about the understatement of tax. If the individual enjoyed significant financial benefit from the omitted taxable income, they cannot claim innocence and are not eligible for relief under this rule.

Question 14

Only the government may appeal a tax case to the U.S. Supreme Court.

Accepted Answer

Both the taxpayer and the government have the right to appeal a tax case to the U.S. Supreme Court if the case involves significant legal issues.

Question 15

Only one spouse must sign a jointly filed Form 1040.

Accepted Answer

Both spouses must sign a jointly filed Form 1040, as this indicates that they both agree to the information provided and are jointly responsible for the tax return.

Question 16

If the IRS assesses additional tax against a corporation after it has liquidated, the shareholders can't be held liable for the tax due.

Accepted Answer

The answer of If the IRS assesses additional tax against...

Question 17

If a taxpayer fails to pay a deficiency, the IRS can garnish the taxpayer's salary or wage to settle the liability.

Accepted Answer

This is true. The IRS has the authority to garnish a taxpayer's wages to collect unpaid taxes, including deficiency amounts.

Question 18

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule unless that person was forced to sign the tax return under duress.

Accepted Answer

The innocent spouse rule allows a person to be relieved of liability for a tax deficiency if they can prove they did not know and had no reason to know about the error on the tax return. Duress is not a requirement for eligibility under this rule.

Question 19

Mr. Fiocchi filed his unextended 2014 Form 1040 on July 22, 2015, and had no reasonable cause for the delinquency. The return showed a $1,906 overpayment of tax (refund due). Compute Mr. Fiocchi's late-filing and late-payment penalty.

Accepted Answer

Since Mr. Fiocchi's return showed an overpayment of tax, there is no tax due. Therefore, there are no late-filing or late-payment penalties applicable.

Question 20

Ms. Hepp filed her 2014 Form 1040 on February 19, 2015. The return showed a $2,730 overpayment of tax, and Ms. Hepp received her refund check from the IRS on April 30. Which of the following statements is true?

Accepted Answer

The IRS does not pay interest on refunds issued within 45 days of the filing date. Since Ms. Hepp received her refund within this period, no interest is due.

Quiz 18: The Tax Compliance Process